Port Authority’s $10B Revamp Tied to Office Projects

At a public hearing on Tuesday, Port Authority officials unveiled an ambitious $10 billion proposal to overhaul the infamous transportation hub, Crain’s reported. Slightly more than a dozen people turned up at the hearing, according to W42ST, though another 50 tuned in online.

Port Authority wants to transform the cramped and cavernous bus terminal into a modern, bright hub for commuters and travelers, along with two new office towers that will rise above the terminal. The agency plans to fund much of the proposed project, but officials are also placing their hopes on $2.5 billion in tax revenue from the new office developments.

If this sounds familiar, it’s because the strategy has been used to help finance Manhattan transportation hub overhauls before: Moynihan Train Hall was financed in part by such a model.

But the high hopes that officials have for a new Port Authority development are risky, given that work patterns, commutes and office real estate have changed indelibly post-pandemic.

The same strategy was in the works with Vornado Realty Trust to help finance a redevelopment of Penn Station. Gov. Kathy Hochul was forced to separate the office projects from the Penn Station funding, however, as Vornado’s office dreams were scuttled by post-pandemic office challenges.

Port Authority executive director Rick Cotton appeared unafraid of that scenario at the bus terminal, expressing confidence the office market will rebound by the time the office towers go up.

But the pairing of office projects and a transformed Port Authority Bus Terminal, specifically, have fallen short before. Vornado nearly developed a 35-story tower for Cisco Systems at the beginning of the century, foiled by the dot-com bubble’s pop.

Steven Roth’s firm also offered to pay for station repairs in the early 2010s as part of a plan to lease air rights over the terminal to develop a 40-story office building. The Great Recession ground that plan to a halt.

This new proposal promises to deliver the project in the next decade, according to Cotton.

Tuesday’s session marked the opening of a 45-day public comment period on Port Authority’s proposal for the terminal. There will be four public hearings in the coming weeks on the plan, which has tentative support from local officials.

— Holden Walter-Warner